Business: Tight-Money Trouble

The tight-money squeeze sent business borrowing costs to their highest level since 1931. Banks all over the nation raised their prime rate to 5% after the pace-setting First National City Bank of New York boosted its prime rate from 4½% to 5%. Since the 5% applies only to top risks, the increase means that smaller businesses will probably have to pay 5%½ or more.

The competition for available funds has been intensified by the crisis in Treasury borrowing. Since the Treasury, restricted by the 4¼% interest-rate ceiling on long-term bonds, can no longer sell such securities, it has had to compete against...

Want the full story?

Subscribe Now


Get TIME the way you want it

  • One Week Digital Pass — $4.99
  • Monthly Pay-As-You-Go DIGITAL ACCESS$2.99
  • One Year ALL ACCESSJust $30!   Best Deal!
    Print Magazine + Digital Edition + Subscriber-only Content on

Learn more about the benefits of being a TIME subscriber

If you are already a subscriber sign up — registration is free!